The ASX200 had a choppy but overall uneventful week on the index level but under the hood reporting season continued to deliver some fascinating volatility. History tells us that companies which rally strongly on good results generally outperform the index for months to come, a couple of lines from Jim Cramer’s Mad Money on CNBC over the weekend caught my eye, especially considering the position of our market as we exit this eventful period which directors generally love, or hate, depending on their year:
- “Just run with the bulls and buy the winning stocks, they’re not that hard to find in this fabulous market.”
- “There are 2 things you need to keep track of when you’re picking stocks right now – the sector and the company”.
- Also, he believes some of the US banks are offering the best value as we approach a new rate hike cycle.
US stocks enjoyed another solid session on Friday night with the S&P500 again closing at fresh all-time highs up +0.9% after Fed Chair Jerome Powell delivered no nasty surprises with his economic speech from Jackson Hole, Wyoming:
- As anticipated the US Fed is likely to begin tapering in late 2021 i.e. the Fed will reduce its bond purchases.
- However interest rate hikes aren’t imminent as their economy has “much ground to cover” before it reaches full employment.
The Fed are clearly cautious about slowing the current nervous economic recovery which is great news for asset prices, including stocks. History tells us they are likely to act too late when rising inflation will be hard to slow but that’s another chapter in this COVID driven tale. For now our line of 2021 remains in play for equities – “buy dips BUT only fade market pops”.
MM remains bullish equities and a buyer of weakness
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